The big problem for small business

This article appears in the November 11, 2013, issue of National Review.

The jobs report for September suggests that the economy is still limping forward, creating jobs at an unusually low rate for an economy in recovery.

Slow job creation can likely be explained by many factors. Those cognizant of the impact of taxes on hiring practices might remind the president that a large fraction of American business income is in the top individual-income tax bracket, and has thus seen a large tax increase this year. Another factor has been the massive expansion of the regulatory state under President Obama. If you want to start a good fight at a dinner party attended by business executives, ask them what is the biggest drag on the economy— Obamacare, Dodd-Frank, or the Obama EPA.

While the president seems to think that all economic weakness is the fault of either George W. Bush or the Republican House, the expansion of the regulatory state on Obama’s watch has been extreme, and the explosion of straitjacket-wielding regulators is becoming visible in the data.

A key source of job creation is, of course, small business, and a key glimpse of the major concerns in this sector at any given moment comes when the National Federation of Independent Business releases its monthly poll of business owners. The nearby chart shows the most commonly cited answers in the poll since February 2008, the year before President Obama took office.

Those familiar with these polls can tell you that, for the most part, businesses tend to downplay the importance of Washington in their decision-making, and this is visible at the beginning of the chart. As the Great Recession kicked into high gear, poor sales were the biggest concern of about 33 percent of firms. But as the economy has slowly recovered, concerns about government have skyrocketed.

Most notably, the percentage of small businesses citing government regulation and red tape as their biggest concern has risen over the course of the Obama presidency from about 11 percent to 24 percent, the highest level this measure has reached since the period between 1994 and 1995, when it peaked at 27 percent. For almost a decade between 2000 and 2008, the level remained steady around 10 percent.

Taxes, the green line, have not skyrocketed as a major concern for firms, perhaps in part because small-business owners were in the crosshairs of this president even at the beginning. Their tax hikes were delayed until this year, but they surely were inevitable.

Perhaps the easiest way to put this extraordinary chart in perspective is to note that the percentage of firms that list either taxes or regulation as their No. 1 concern has risen to 42 percent. That Washington could be a bigger concern than this weak economy for so many businesses is quite an accomplishment. Congratulations, Mr. President.

-Kevin Hassett is the John G. Searle Senior Fellow and Director of Economic Policy Studies at AEI.

Quotes & Notes

"Terrorism flourishes because they are protected by a Left-wing denial industry" . --- author unknown

"Facts are rarely allowed to contaminate the big-government utopian delusion of the Left" -- author unknown

"Without double standards, the Left/Statists/Liberals would have no standards at all" -- author unknown

"The champions of socialism call themselves progressives, but they recommend a system which is characterized by rigid observance of routine and by a resistance to every kind of improvement. They call themselves liberals, but they are intent upon abolishing liberty. They call themselves democrats, but they yearn for dictatorship. They call themselves revolutionaries, but they want to make the government omnipotent. They promise the blessings of the Garden of Eden, but they plan to transform the world into a gigantic post office. Every man but one a subordinate clerk in a bureau. What an alluring utopia! What a noble cause to fight!" -- Ludwig von Mises (1881-1973) Economist and social philosopher

"And what is Fascism? Fascism is private ownership, private enterprise, but total government control and regulation. Well, isn’t this the liberal philosophy?

Liberals value theory over truth and facts

The conservative, so-called, is the one that says ‘less government, get off my back, get out of my pocket, and let me have more control of my own destiny.'" -Ronald Reagan

"Liberals sense of moral righteousness doesn't come from achievement - it comes from believing that you are a bad person... for a Liberal to be morally superior, they must paint Conservatives as morally inferior, even if they have to lie. It's an unearned sense of moral superiority."

"The left no longer makes arguments about policies' effectiveness. Their only argument is character assassination"

"The religion of Leftism supersedes the law, fairness or personal integrity."

"...liberals are big fans of freedom speech, freedom of expression, freedom of anything and everything - unless, of course, they disagree with whatever the “anything or everything” is." - Adam Corolla

"I have never understood why it is 'greed' to want to keep money you've earned, but not greed to want to take someone else's money". - Thomas Sowell

"Have I not destroyed my enemy when I have made him into my friend?" -Abraham Lincoln

"The most intolerant people I've ever met are those Liberals who consider themselves most tolerant." -MB

"Freedom is never more than one generation away from extinction. We didn’t pass it to our children in the bloodstream. It must be fought for, protected, and handed on for them to do the same, or one day we will spend our sunset years telling our children and our children’s children what it was once like in the United States where men were free."

"Well, the trouble with our liberal friends is not that they are ignorant, but that they know so much that isn’t so." -Ronald Reagan

"The problem with Socialism (Liberalism) is that eventually, you run out of other peoples money" - Margaret Thatcher

"If you think criminals and lunatics are going to obey gun control laws, you're a special kind of stupid" -MB

"One thing you have to say about the Left: They never miss an opportunity to let the mask of hatred slip. It’s practically Pavlovian; they are so invested in the myth of their own righteousness that their “tolerance” fetish goes right out the window whenever they suffer the slightest affront to their delusional notion of how the world works." - Michael Walsh